RES 2010-17 AMENDING RES 2010-17; AN EXTENSION OF SCHEDULED REPAYMENT SHORT-TERM BORROWING-.RESOLUTION N . 2010-1'
A RESOLUTION of the City Council of the City of Bainbridge
Island, Washington, amending Resolution No. 2010-17, providing
for an extorsion of the sched l d repayment date to the short-terrn
borrovAng from the 'mater Fund - t the Sewer Fund of the
Consolidated Waterworks Utility.
WHEREAS, the City of Bainbridge Island, Washington (the "City" intends to manage it fiscal
matters i prudent manner; and
WHEREAS., the City has by Resolution No, 2008-14 sought to "establish conditions for the
f debt and to create procedures and policies -that minimize the City's debt service and issuance
costs, retain the highest Tactical credit 'rating, and maintain fall and complete financial
disclosure and reporting";' and
WSAS:,- the City has also by Resolution No. 2008-14 pertainingto "Purposes and Uses of
Debt". established Policy 1 - Short-term Borrowing which states; "'Except for LIDS and
similar situations, the use o short-term borrowing, such as bond anticipation notes Alis and
tax-exempt commercial 'aper will be undertaken only if the transaction, costs plus interest of the
debt are less than the cost of an interfund loan,' or available- cash is insufficient to meet working
capital requirements"; and
WHEREAS, the 2008 GAAP BARS Manual, Volume 1, hart 3, chapter 4, page 1, states that
"the. legislature body of a municipality must, by ordinance or resolution, approve all interfund
loans, andprovide in the :authorization planned schedule of repayment of the loan principal as
well as setting a reasonable rate of interest (based on the external rate available to the
municipality) to be paid to the lending fund"; and
WHER EAS, the City has determined that the combination of transaction costs plus interest for
the City'to issue commercial paper or a note to a third party will exceed the costs to the: Sewer
Fund f an interfund loam, primarily 'because an interfund loam entails no third -party transaction
casts; and'
WHEREAS, the City, pursuant to Resolution No. 2009-1, had previously reviewed the
financial position and its cash flow analysis for the Serer and Nater Funds of the Consolidated
Waterworks Utility and determined it prudent for th.e Sewer Fund to engage in short -tern
borro4ing of an amount not to exceed a principal amount of $3,000,000 from the Water Fund
within the Consolidated Waterworks futility of the City, with a scheduled repayment date of May
14, 2010, in order to continue the construction and related expenses of the Wastewater Treatment
Plant Upgrade project and to address legal challenges brought forth by the Bainbridge
Ratepayers Alliance; and
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WaterSew rE tnII E SOLUTION NO 2010 17.d c
]]' y7 . 2009- set Sewer mates four 2 through
WHERE,�� � City, rant � or'�r.n � �
I
2014 in accordance with the recommendations of the FCSGroup Rate Study and the Utility
..
Advisory Committee with a deferral of the repayment of the rnterfund loan 1n order 16 mitigate
�" y
the effect of necessary nate changes, and
.
WHEREAS the City has determined that 1n order. to continue to address . legal bhallenges
brought by ratepayers -of the Consolidated Water Works Utility and be consistetif with the
recommendations of Ordinance leo. 2009-39 and the recommendations of the Unfitr Advisory
Commission it will be necessary to extend the scheduled repayment date to May 13, 20-1 1; and
WHEREAR, the use of an interfund loan continues to allow considerably greater flexibility and
timeliness than commercial paper or a note to a third -party lender, and thereby errni he City
to reduce the interest cost to the Sewer Fund; and
1
WHEREAS, the City Council continues to find that it has exercised due regard for the
maintenance and operation expense of the Water System and finds that the Water Fu d revenues
and cash balances are expected to e more than sufficient to meet all of the needs f the. Water
expected
' balance
h n er f gad loan. as
Fund through the loan period and has fu.� available to rra.l�l�a1 t � 1.�
previouslyauthorized; and
WHEREAS, the Water Fund of the. Consolidated Waterworks Utility will be benefited b the
interest rates of the rrrterfund loan; now, therefore,
BE IT RESOLVED Y THE CITY COUNCIL of THE CITY of BAINBRIDGE
f
ISLAND, WASHINGTON, GTON, S FOLLOWS:
Section 1. Extension of the Scheduled Repayment Date. The City's Director of Finance is
authorized and directed to extend the scheduled repayment date of the loam to May 13, 2011 as
stated in Section 2 and this interfund lending authorization shall terminate on that date,
Section 2. Interest Payable to 'mater Fund. Interest shall. continue to be computed monthly on
the amounts outstanding on the basis of a 360 -day year for the actual number of `days at an
annual rate equal to 25 basis points, plus the higher of the monthly net earnings r4te for the
preceding calendar month on investments in either a the Washington Mate Local Government
Investment Fool, or b the Kitsap County Local Government Investment fool. The City
Council finds that the fixing of the interest rate set forth herein is reasonable and hi the best
interest of the City, its ratepayers and its taxpayers.
Section 3, Effective Date. This resolution shall be in full force and effect from aid after its
approval by the City Council until the date stated in Section 2.
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= PASSED by the City Council this -28"' of April 2010.
APPROVED by the Mayor this 28th day' of April 2010.
Bob Scales, Mayor
ATTEST:
Rosalind D. Lasso , City CFerk
FILED WITH THE CITY CLERK: April 2, 201
PASSED BY THE CITY COUNCIL: April 28, 2010
RESOLUTION NO. 2010-17
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